MSME sector in Gujarat planning to adopt aggressive restructuring model

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The COVID-19 pandemic has hit all industries, especially the Micro, Small, and Medium-scale Enterprises. The MSME sector in Gujarat anticipates that it will take a long time to get back on track and hence, is adopting an aggressive business restructuring model.

The various factors which are affecting the industry are low fresh demand, higher costs, fixed expenses, and low cash. Under the aggressive business restructuring model, 22% of the units switched to multi-tasking to get maximum output at minimum manpower at low cost and 36% of the units are reducing fixed costs heavily.

A market survey was conducted by Surat-based Stratefix consulting to understand the challenges faced by MSMEs after the unlock and the efforts that they are putting in to recover from it.

Around 22% of the participants stated that they will be following maximum work, minimum workforce model. Spending money on unnecessary expenses will be restricted due to limited investment prospects in the future. Many workers were laid off to reduce fixed expenses and multi-tasking is adopted to meet the shortfall of skilled workers.

Around 18% of companies believe that new customers are not available due to weak demand, hence they are providing the best services to the old customers to retain them. Around 10% of respondents are focusing on IT and automation processes to make the system dependent on machines rather than humans.

The two primary reasons for restructuring is low demand in the market and cash in hand is also limited. The business restructuring has opted as it is difficult to run a company with small working capital.

Stratefix consulting was started in 2017 by Mr. Chirag Patel and Mr. Mukul Goyal to provide advisory and implementation services in the area of management consulting. The company has completed 250 plus consultancy assignments. The clients of the firm vary from SME sectors to large conglomerates.

According to Mr. Mukul Goyal, the founder, and partner of Stratefix consulting, the business restructuring model is the need of the hour currently as it can fetch good results at a lower cost. The company conducts Detailed Need Analysis (DNA) of the current Modus-Operandi of the client`s business and identifies areas of improvement and challenges which has been restricting growth.

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